Toys “R” Us Canada commences CCAA proceedings amid acute liquidity crisis

Toys “R” Us (Canada) Ltd. commenced proceedings under the Companies’ Creditors Arrangement Act on February 3, 2026, with the Ontario Superior Court of Justice (Commercial List) granting an Initial Order providing an initial 10-day stay of proceedings, approving interim debtor-in-possession financing, appointing Alvarez & Marsal Canada Inc. as monitor, and confirming the appointment of Neil Taylor as Chief Restructuring Officer. The Court authorized initial DIP borrowings of $4.5 million from the company’s parent, 2625229 Ontario Inc., and granted priority administration, DIP lender, and directors’ charges over the company’s property. The Initial Order also permits the company to honour pre-filing gift cards for 14 days following the filing date.

The applicant operates 22 Toys “R” Us stores across Ontario, Manitoba, Saskatchewan, Newfoundland, Alberta, and Quebec, each incorporating a Babies “R” Us section, with average store sizes of approximately 45,000 square feet. The business historically included a national e-commerce platform, which has been suspended. Thirteen of the active store leases are held with related-party landlords controlled by the company’s ultimate owner, Douglas Putman. In addition to the active locations, the company has approximately 9 recently vacated stores with unexpired leases and has closed and exited approximately 53 additional locations over the past 2 years.

The filing follows a sustained deterioration in liquidity driven by declining in-store sales, rising labour and occupancy costs, post-pandemic supply chain disruptions, and a structural shift toward e-commerce. Despite aggressive cost-reduction measures, including head-office reductions, workforce optimization, and widespread store closures, these initiatives failed to stabilize cash flow. During the 10-month period ended November 29, 2025, the company reported a net loss of approximately $170 million. As of that date, it reported a working capital deficiency of approximately $315 million and assets with a book value of approximately $127 million.

Unsecured claims total approximately $160 million, consisting primarily of $120.9 million owed to merchandise vendors, $26.0 million owed to service providers and other non-trade creditors, and $4.7 million in rent arrears and related obligations associated with the 22 active stores. The company also reports approximately $36.1 million in outstanding gift card obligations, net of estimated breakage, and faces extensive landlord litigation related to vacated locations. Secured debt includes approximately $17 million owing to 262 under promissory notes secured by a general security agreement, as well as approximately $76.8 million outstanding under a deferred purchase price structure arising from the 2021 acquisition of the business from Fairfax Financial Holdings Ltd., secured against the company’s intellectual property.

Neil Taylor was appointed as Chief Restructuring Officer to oversee the stabilization of operations and guide the restructuring process during the CCAA proceedings. According to the monitor. The company has stated that the restructuring is expected to include the closure of additional underperforming stores, liquidation of related inventory and fixtures, and the development of a court-supervised sale and investment solicitation process to pursue a going-concern transaction, refinancing, or orderly liquidation.

Counsel includes Aird & Berlis for the applicant, Stikeman Elliott for the monitor, Blake, Cassels & Graydon for Lego Canada, McEwan Partners for Kingsway Project GP Ltd., Fasken Martineau DuMoulin for Dexterra Group Inc., Witten for Cameron Corporation and Canadian Property Holdings (Alberta) Inc., Lawson Lundell for Ravine Equities Inc. and Ravine Properties Limited Partnership, and Cambridge for The DAAN Groups Inc.